Slide 1: Investor Presentation August 2007
August 2007 I n vestor Presentation www.ctscorp.com
Slide 2: Safe Harbor Statement
This presentation contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect ou
Slide 3: Global Operations
Automotive Electronic Components EMS Operations Global Operations
Slide 4: Segments and Sales by Market
Based on last four quarter sales through June 2007 Total CTS EMS 60% Components & Sensors 40% Computer/ Medical 2% Segments Automotive 25% Communications 6% Other 7% Communications 16% Computer 22% Industrial/ Medical 15% Defense/ Aerospace 7% Sales By Market
Slide 5: Sales Diversification
Based on origin of sales Regions Customers Top 2 Low Cost Manufacturing 44% Very Diversified Customer and Geographic Base Sales Diversification
Slide 6: Growth Drivers 2007-2010
Overall Organic Growth Target: 6% - 9% – Automotive (Double-digit growth) • Asian customers (Toyota, Honda, Chery) • New products and product extensions (e.g. Smart Actuators and Turbochargers) • Tighter emissions regulations (for light vehicles and adjacent/commercial markets) – Electronic Componen
Slide 7: Automotive Products Strategy
Strategy Aggressively expand product base. Content growth > unit growth. Broaden customer base. Leverage product/market strength into Asian market. Penetrate adjacent / commercial markets. Targeting Double-Digit Growth Automotive Products • – • • •
Slide 8: Accelerator Pedal Module: Awarded 55 Platforms
• CTS currently supplies 10 major customers in North America, Europe and Asia. • New wins include seven recently announced awards from Chery. Total Available Market (Including Pedal Sensors) $150 $223 $266 $361 $381 $330 CTS Accelerator Pedal Modules Offer Performance, Quality and Cost Advantages CT
Slide 9: Asian Automotive Growth
CTS Sales $ in Millions Actual 10 Year Projected Growth In Vehicle Sales (17M Units) Asian Automotive Growth Asia Over 50% of Growth China regulations driving local content CTS Operations in Taiwan and China New Zhongshan facility fully operational
Slide 10: Electronic Components: Leveraging Growth Opportunities
Strategy Focus on higher margin engineered components. Launch innovative and differentiating new products. Expand into new customers and applications. Leverage our global footprint and Asian manufacturing. • • • • Leveraging Growth Opportunities Electronic Components
Slide 11: Electronic Components Sales: Diversified Product/Market Portfolio
Frequency Components/Modules PRODUCTS Communications (Primarily Infrastructure Applications) MARKETS Based on 2006 Sales Ceramic Filters Resistor Diversified Product/Market Portfolio PZT Switches Consumer Industrial/Other (incl. Hydrophones/Printers) Computer Medical Defense/Aerospace Electronic Com
Slide 12: Electronic Components - Communications Infrastructure
WiMAX Optical Networking Cellular Repeaters Wireless Base Station Satellite Communications Infrastructure Sales $ Millions OCXO RF Module Filter Electronic Components - Communications Infrastructure
Slide 13: Electronics Manufacturing Solutions Strategy
i Target customers with complex needs. i Offer full-service flexibility. i Leverage geographic footprint. – Global sourcing. – Local NPI Ù global completion. Strategy Electronics Manufacturing Solutions
Slide 14: EMS Industry Customer Tiers
CUSTOMER Characteristics/Needs EMS Companies EMS Industry TIER 1 4 Large/Global > $2B 4 Optimized to Low Mix - High Volume TIER 2 4 Medium/ Regional/Global $200 - $2B 4 Optimized to High Mix - Medium Volume TIER 3/4 4 Small/Regional < $200M 4 Optimized to High Mix - Low Volume g Large OEMs g Low Mix
Slide 15: Improved Customer/Market Mix EMS Business
Communications Industrial Medical Computer First Half 2007 Aerospace/ Defense Added 20 new customers in 2006 Improved Customer/Market Mix EMS Business
Slide 16: Financial Summary
Financial Summary Definitions and reconciliation of non-GAAP financial terms are included in the Appendix of this presentation and on CTS’ Web site at www.ctscorp.com
Slide 17: New Products/Acquisition Driving Sales Growth
$ in Millions First Half New Products/Acquisition Driving Sales Growth Sales
Slide 18: Earnings Growing Faster Than Revenues
GAAP* * Includes $0.05 for one-time investigation costs / professional fees. Earnings Growing Faster Than Revenues $0.71 $0.75 EPS
Slide 19: Expense Leverage Contributing to Earnings Growth
12.5% 13.0% Expense Leverage Contributing to Earnings Growth S,G&A and R&D Expenses (Percent of Sales)
Slide 20: Efficient Utilization of Capital
Capital Expenditures Controllable Working Capital* * Controllable Working Capital Defined as Accounts Receivable + Inventories - Accounts Payable. Normal Level 3% Target 13% Efficient Utilization of Capital 4% Balance Sheet Management
Slide 21: Strong Free Cash Flow Indicates Quality of Earnings
$ in Millions Strong Free Cash Flow Indicates Quality of Earnings Net Earnings and Free Cash Flow
Slide 22: Strong Balance Sheet
Current Capital Structure Total Debt to Capitalization 195 Total Debt Cash Debt to Capitalization 66 Equity Strong Balance Sheet Supports Growth and Shareholder Value Initiatives Capital Structure
Slide 23: Growth Strategies are Working
• Positioned in high-growth markets. • Positive cash flow to fund growth. • Leverageable capacity and operating structure. • Strong balance sheet and conservative capital structure. Growth Strategies are Working Expect EPS Growth > Sales Growth Value Proposition
Slide 24: Appendix
APPENDIX
Slide 25: Automotive
® ® Automotive EC EMS Customers
Slide 26: Automotive Product Applications
Position Sensors: Air Intake Exhaust Gas Re-circulating Accelerator Pedal Modules: Pedal Position Sensors Fuel Level Sensing Seat Belt Tension Sensors Electronic Throttle Sensors Electric Actuators: Active Manifolds Turbochargers Diesel Systems Automotive Product Applications
Slide 27: EMS Product Applications
Medical Devices & Equipment Defense & Aerospace Storage Infrastructure Communications Infrastructure Industrial Applications Pain Management Glucose Monitoring CO 2 Cabinets Blood Analysis Ophthalmology Heart Defibrillator Thermal Weapons Secure Phone System Radar Systems Defense Comms RAID Card GSM
Slide 28: Electronic Components Product Applications
Resistor & Frequency Products Frequency Filters and RF Modules for Infrastructure Variable Resistors, Encoders & Switches Router Storage Test System Game Controller Server Instrument Piezoelectric Medical Ultrasound Wide Format Inkjet Printer Head Undersea Energy Exploration WiMAX Wireless Base Stat
Slide 29: Major CTS Competitors
Electronic Components PRODUCTS Automotive Products Frequency Products - Infrastructure Ceramic Filters Resistor Networks Electronics Manufacturing Services COMPETITION AB Electronics, Alps, Bosch, Delphi, Denso, Hella, Mikuni, SiemensVDO C-MAC, M/A Com, Mtron, Raltron, Pericom, Sirenza, Vectron, Z-C
Slide 30: Electric Actuators
§ Initial growth with torque motor technology on active manifolds § Brushless DC motor technology extends application and torque range to multiple powertrain applications - Integrated drive and sensor electronics - Brushless reliability Total Available Market $ in Millions Integration of CTS sensor
Slide 31: Electronic Components - Piezo Electronic Elements
Sales $ in Millions Medical Ultrasound Wide Format Inkjet Printer Head Undersea Energy Exploration Technology : - Superior piezo ceramic material - Photolithographic capabilities - Ultra-Thin - High dielectric Electronic Components - Piezo Electronic Elements
Slide 32: Overall ROIC Improvement on Track
OPERATING MARGIN AFTER-TAX (NOPAT Margin) INVESTED CAPITAL TURNOVER 2003 2004 2005 4% 2% 6% 8% 0.5 1.0 1.5 2.0 2.5 3.0 3.5 ROIC 10% 12% 4.0 2006 Target Adjusted Return on Invested Overall ROIC Improvement on Track 4.0% 6.3% 7.5% EMS Components & Sensors 7.9% Capital (ROIC)
Slide 33: Financial Summary
Note: Data shown excludes all restructuring and related one-time charges, asset impairments, customer reimbursement, income tax adjustment and material asset gains, except adjusted EBITDA, which includes the customer reimbursement only. Financial Summary
Slide 34: Other Financial Data - Income Statement
Note: Data shown excludes restructuring costs, income tax adjustments related to repatriation and material asset gains. Other Financial Data - Income Statement
Slide 35: Other Financial Data - Balance Sheet Metrics
Other Financial Data - Balance Sheet Metrics CTS Corporation Appendix CTS Corporation Reconciliation of Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Full Year Q3 Q2 Q1 Q4 Q2 Earnings per share $ 0.16 $ 0.14 $ 0.13 $ 0.19 $ 0.10 $ 0.53 $ 0.53 $ 0.36 $ (0.54 ) Tax affected charges